the curious cat

Menu

Tag Archives: externalized costs

There is rarely genuine public debate about almost any important issue in American society. Listening to healthcare reform on the corporate media, I was reminded of this. It didn’t slip past my notice that the entire frame of discussion is seeking corporatist solutions to corporatist problems in a corporatist political and economic system. The fact of the matter is that there is no way to provide better and cheaper healthcare to more citizens, as other countries do, through the capitalist system. In particular, the last thing in the world we need is further aligning big business with big government.

Here is what is rarely brought up. Consider the simple fact that 40% of the deaths worldwide are caused by pollution. And that is one small part of externalized costs, externalized often by corporations that make immense profits from that externalization that goes hand in hand with internalizing benefits. Most of the people harmed by these externalized costs are the lower classes who are the least able to seek healthcare to treat health conditions caused by wealthy and powerful interests. First of all, we should stop these corporations from externalizing costs. But to the extent that isn’t always possible, we should tax these corporations to pay for those externalized costs, which is to say those who benefit the most from the system should pay the most to offset the costs of the system.

This is common sense. Only a sociopath could argue against it, but sadly we have a system that promotes the sociopathic mindset and gives a platform to the sociopathic rhetoric that justifies it. The plutocrats who are harming others for their own self-interest have the morally depraved sense of privilege to complain that taxes are theft. These are the same plutocrats who have spent their lives stealing from the commons, stealing from the public good. They internalize and privatize the benefit from resources taken from public lands, from their dominant use of the public infrastructure, from highly profitable government contracts (often crony no bid contracts), from control of the government (through lobbying, revolving door, regulatory capture, legalized bribery, etc), from free trade agreements written in their favor to help them dominate global markets, from a military that serves to protect their interests (maintaining international relations, keeping open trade routes, ensuring access to natural resources on foreign public lands, etc), and on and on. All paid for with public wealth and resources. This gives the appearance of legitimacy to the illegitimate.

There is an important point that gets lost here. The plutocrats are half right about one thing. We shouldn’t rely on taxes of plutocrats to fund the public good. Rather, we simply shouldn’t allow plutocrats to steal from the public good in the first place, such that taxation becomes necessary. Once that theft has happened, the plutocrats will treat this theft as their right and privilege. As they see it, everything that is public is theirs to take, even the government itself. It’s all theirs and so if we don’t let them rape and pillage freely across the world, we are stealing from them just as the starving peasant was stealing from the lord when he gathered some food for his family from what once was feudal commons. They accuse others of theft out of bad conscience, knowing that their entire way of life is theft.

The reality is that the US is the wealthiest country in the world. In global capitalism, the public wealth and resources regularly given away and wasted for private interests is easily in the trillions of dollars on a yearly basis. It might be trillions in just considering the direct benefits corporations have on US land and waters. The precise amount has never been calculated because the corporatist don’t want to know or rather don’t want the rest of us to know, although I’m sure they have a good sense of the approximate amount of what is being sucked out of the system. Whatever the exact amount, it’s guaranteed that it could pay for healthcare for every US citizen, along with so much else.

There is the basic problem that healthcare can’t operate as a free market for many reasons, the most basic of which is that sick and injured people aren’t in the mindset to be able to make rational choices, even if we had a system that offered real choices. The problem goes so much deeper than that, though. It’s the entire system that has failed and so no solution can be found within the system. In fact, this system is designed to fail according to the standard of public good for the simple reason that the interests it is designed to serve are not we the people.

This is what is never stated in a straightforward manner. There is no lack of public wealth and resources. The question is where is it going, when it is redirected away from the public good and siphoned off into the private sector. This question is not allowed to be fairly and fully discussed in the corporate media and corporatist politics that the plutocracy controls. The final proof that we live in a banana republic is that we the public are effectively silenced in public debate about our own public good, such that the majority has yet to realize it is a majority. The public majority demanding public healthcare reform that benefits most Americans should be heeded by the political system claiming to represent we the people.

“A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death.”
~ Rev. Dr. Martin Luther King, Jr.

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. This is not a way of life at all in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron.”
~ President Dwight D. Eisenhower

“Every time they raise your tuition you are paying for the cost of empire. Every time they cut funds to the state of Wisconsin you have to make up the difference. Everywhere I go… and, when I pick up the local newspapers, it often seems like the same paper and every paper has the same story for a while, factoring when the fiscal year was ending, it would say: ‘State facing huge deficits’, ‘City council voting cuts in budget’…“That is the cost of empire. What happens then is our economic democracy is under attack.“Not everyone, as they say, pays the costs. Some people profit immensely.”
~ Michael Parenti, Ph.D.

Some people have talked about actual functioning communism. It was the understanding that we have to deal with what we have, rather than what we wish we had.

Soviet communism, for example, had nothing to do with what Marx wrote about. Nonetheless, Marx was irrelevant for someone living in the USSR. Someone could point to non-authoritarian examples of socialism and other left-wing politics, but that was besides the point. The Soviet citizen had to deal with the reality before them.

That is the situation we find ourselves right now with capitalism. Despite all the rhetoric, actual functioning capitalism doesn’t operate according to theory and ideal. It relates to what some have come to call capitalist realism—this is the belief that no matter how bad it is there is nothing better, that in some basic sense this is as good as it can get, and even that it is inevitable. Capitalism, in this view, is merely human nature. It’s pure cynicism and it shuts down imagination.

This is why it is all the more important to look at a social system for what it is. And, indeed, capitalism is first and foremost a social system. Economic ideology is window dressing.

This was made clear to me by recent data I was looking at.

There is one report from the UN. It looked major industries and specific externalized costs related to the environment. It was determined that many of these major industries either broke even or made a net loss. It was only because of externalization that they made any profit at all. To consider how massive is that externalization, all you have to is look at how wealthy and powerful are the corporations in these industries.

Those costs still are paid. Just not by the big biz. They are paid for by governments through subsidies, tax breaks, below market price resource extraction, public clean up of environmental destruction, etc. This is to say that all of this is paid for by the public taxpayer and by public natural resources.

Neoliberalism and corporatism also comes with many other costs that are harder to calculate: destruction of communities, loss of social capital, destruction of culture of trust, and similar things. Actual functioning capitalism puts immense pressure on every aspect of society. And it is very much personal. The biggest producer of pollution is big biz. That pollution is responsible for 40% of the deaths in the world. Not just deaths, but also shortened lives, disability, suffering, and healthcare costs.

The UN report was rather limited. It only took into account a few easily measured externalizations. They barely got at the reality of the situation which is much starker.

As a more specific example, consider Walmart. It has received a lot of attention and so its impact has been studied thoroughly. Walmart is the single largest employer in the United States. Their employees are the single largest group of welfare recipients in the country. And Walmart itself is the single largest beneficiary of the use of welfare such as food stamps. Walmart is the ultimate Welfare Queen.

It’s worse than only that. When a Walmart comes to a community, it is a net loss to the local economy. It forces out most of the local businesses. This leads to the death of downtowns which were the hearts of these communities. Walmart stores also decrease the number of employed, which is to say they either force more people into unemployment or to move out of town to look for work. For those who still are employed, Walmart drives down wages and so increases poverty even among the employed, which necessitates higher rates of welfare.

It occurred to me that Walmart isn’t being run as a normal for-profit business. It’s sole role is to externalize costs and redirect wealth upward while keeping the masses just barely comfortable enough with cheap food and cheap consumer crap, similar to the Roman plutocratic tactic of social control through bread and circus. But the only reason the masses need all that cheap stuff is because corporations like Walmart have put so many people into poverty. Their communities destroyed and their lives made desperate, consumerism becomes the new religion and Walmart the official state church.

As such, Walmart is the perfect expression of actual functioning capitalism, in the United States and increasingly around the world. But Walmart is far from alone. The UN report shows that many major industries aren’t being run like normal for-profit businesses, considering they aren’t really making profits when externalized costs are included. Capitalism is simply another name for corporatism. The reality has nothing to do with the rhetoric about competitive free markets.

Like the political system, the economic system is rigged. It’s social control by another means.

Jared Dillian wrote an article simply titled, Frrrreeeeeddoommmm. I think we are supposed to imagine the title being screamed by Mel Gibson as his Braveheart character, William Wallace, is tortured to death. The author compares two states, concluding that he prefers ‘freedom’:

“If you want someone from Connecticut to get all riled up, drive extra slow in the passing lane. Connecticutians are very particular about that. The right lane is for traveling, the left lane is for passing. If you’re in the left lane for any other reason than passing, you are a jerk.

“So if you really want to ruin someone’s day, drive in the left lane at about 50 miles per hour. They will be grumpy for three days straight, I assure you.

“I was telling this story to one of my South Carolina friends—how upset people from Connecticut get about this, and how people from South Carolina basically drive however the hell they want—and he said ruefully, “Freedom…”

“He’s a guy who perhaps likes lots of rules to organize society, and perhaps he’d rather live in a world where some law governs how you conduct yourself in every aspect of your life, including how you drive. I tell you what, after growing up in Connecticut and then spending the last six years in the South, I’m enjoying the freedom, even if it means I occasionally get stuck behind some idiot.”

I take seriously the freedom to act, even when others think it’s wrong, depending of course on other factors. But there is no such thing as absolute freedom, just trade-offs made between benefits and costs. There are always constraints upon our choices and, as social animals, most constraints involve a social element, whether or not laws are involved.

Freedom is complex. Freedom from what and/or toward what?

The driving example is perfect. Connecticut has one of the lowest rates of car accidents and fatalities in the country. And South Carolina has one of the highest. Comparing the most dangerous driving state to the safest, a driver is 10 times more likely to die in an accident.

Freedom from death is no small freedom. Yet there is more to life than just freedom from death. Authoritarian countries like Singapore probably have low car accident rates and fatalities, but I’d rather not live in an authoritarian country.

There needs to be a balance of freedoms. There is an individual’s freedom to act. And then there is the freedom to not suffer the consequences of the actions of others. There is nothing free in externalized costs or, to put it another way, all costs must be paid by someone. It’s related to the free rider problem and moral hazard.

That is supposed to be the purpose of well designed (i.e., fair and just) political, legal, and economic systems. Freedom doesn’t just happen. A free society is a creation of choices made by many people over many generations. Every law passed does have unintended consequences. But, then again, every law repealed or never passed in the first place also has unintended consequences. There is no escaping unintended consequences.

There is also a cultural component to this. Southern states like South Carolina have a different kind of culture than Northern states like Connecticut. Comparing the two regions, the South is accident prone in general with higher rates of not just car accidents but also such things as gun accidents. In the North, even in states with high gun ownership, there tends to be lower rates of gun accidents.

In Connecticut or Iowa, it’s not just lower rate of dying in accidents (car, gun, etc). These kinds of states have lower mortality rates in general and hence on average longer lifespans. Maybe it isn’t the different kinds of laws that are the significant causal factor. Instead, maybe it’s the cultural attitude that leads both to particular laws and particular behaviors. The laws don’t make Connecticut drivers more safe. It’s simply that safety-conscious Connecticut drivers want such laws, but they’d likely drive safer even without such laws.

I’m not sure ‘freedom’ is a central issue in examples like this. I doubt Connecticutians feel less free for having safer roads and more orderly driving behavior. It’s probably what they want. They are probably just valuing and emphasizing different freedoms than South Carolinians.

There is the popular saying that your freedom ends at my nose. Even that leaves much room for interpretation. If your factory is polluting the air I breathe, your freedom to pollute has fully entered not only my nose but also my lungs and bloodstream.

It’s no mere coincidence that states with high accident rates also tend to have high pollution rates. And no mere coinicidence that states with low accident rates tend to have low pollution rates. These are the kinds of factors that contribute to the disparity of mortality rates.

It also has to do with attitudes toward human life. The South, with its history of slavery, seems to view life as being cheap. Worker accident rates are also higher in the South. All of this does have to do with laws, regulations, and unionization (and laws that make union organization easier or harder). But that leaves the question of why life is perceived differently in some places. Why are Southerners more cavalier about life and death? And why do they explain this cavalier attitude as being an expression of liberty?

To many Northerners, this cavalier attitude would be perceived quite differently. It wouldn’t be placed in the frame of ‘liberty’. This relates to the North literally not being part of the Cavalier culture that became the mythos of the South. The Cavaliers fought on the losing side of the English Civil War and many of them escaped to Virginia where they helped establish a particular culture that was later embraced by many Southerners who never descended from Cavaliers*.

Cavalier culture was based on honor culture. It included, for example, dueling and violent fighting. Men had to prove themselves. Recent research shows that Southerners are still more aggressive today, compared to Northerners. This probably relates to higher rates of road rage and, of course, car accidents.

Our culture doesn’t just encourage or discourage freedom. It more importantly shapes our view of freedom.

(*The apparent origin of Dillian’s article is a bit ironic. William Wallace fought against England which was still ruled by a Norman king, which is to say ruled by those whose descendants would later be called Cavaliers in their defense of the king against the Roundheads. The French Normans had introduced such fine traditions as monarchy, aristocracy, and feudalism. But they also introduced a particular variety of honor culture that was based on class and caste, the very same tradition that became the partly fictionalized origin story of Southern culture.)

Externalized costs have been on my mind for a very long time. Ours is a self-enclosed biosphere. All costs are ultimately internal, no matter how much we pretend otherwise.

My sense of the political has been rooted in environmentalism, from early on in my life. This worldview has been informed by a larger environmental sense of the world, including the social and economic environment. It’s always been how I experience reality, as something far beyond the false divisions we create and reify—between individual and collective, self and world, society and nature.

My young political sensibility was expressed in school papers I wrote about externalized costs, a gut level intuition about what was being lost. These papers were about overpopulation and pollution. Now here I am as an adult and everything has gotten far worse, some might say beyond the point of no return.

Pollution and environmental destruction knows no boundary. The natural world cares not about our ideological beliefs. It doesn’t matter who is fault when the costs come due. The free market is and always was bullshit. Nothing is free, even if we don’t see the price tag. In fact, capitalism is rather costly. The ultimate cost might be greater than we can afford.

These costs are highly personal. I’ve talked many times about lead toxicity, the costs of which are numerous and yet still measurable. For every IQ point lost to lead toxicity, it is a specific amount of money lost in lifetime earnings. Multiply that by many IQ points lost for untold millions of people. The costs are devastating and that is considering just one of many costs.

Considering all pollution and environmental degradation, that is the cause of 40% of the deaths worldwide. Those deaths include working men and women who were helping care for family members. Those deaths represent human potential thrown away. Those deaths didn’t just happen instantly but followed years or even decades of illnesses, suffering, and healthcare costs.

Other costs are also economic on the larger scale, which also can be measured. For a long time, I’ve suspected that many corporations would go bankrupt if they were ever forced to pay for their externalized costs. This was shown to be the case with a recent UN report:

“The report found that when you took the externalized costs into effect, essentially NONE of the industries was actually making a profit. The huge profit margins being made by the world’s most profitable industries (oil, meat, tobacco, mining, electronics) is being paid for against the future: we are trading long term sustainability for the benefit of shareholders. Sometimes the environmental costs vastly outweighed revenue, meaning that these industries would be constantly losing money had they actually been paying for the ecological damage and strain they were causing.”

This means these industries are environmentally a net loss to the global society. They aren’t contributing more to society than they are taking away. All the rhetoric of capitalism, meritocracy, and progress is lies built upon lies.

We obsess about individual problems when that isn’t the real danger we face. We make people feel guilty about recycling at home while corporations throw out so much potential recyclables as to make all the rest look minuscule. Similarly, almost all the pollution comes from big biz, not from people driving their cars too much or whatever. If we wanted to make a dent in these problems, we’d tackle it at the largest level of the most major contributors to these problems, instead of tinkering around the edges.

Meanwhile, these companies that profit from human misery, from the forced sacrifice of present and future generations lobby the world’s governments so that they’ll make even greater profit. They get tax breaks and subsidies. They hide their profits in fake businesses and secret overseas accounts. We debate about whether taxes are too high when any rational and moral person is forced to admit that taxes don’t come close to offsetting all the costs these filthy rich corporations force onto the rest of society.

Why do we tolerate this? Are we mentally deranged? Are we suicidal?

If the unsustainable costs of industrial externalities doesn’t incite mass outrage and force systemic global reform, then there is no hope left for humanity. We are doomed. Saving capitalism from communism will be the least of anyone’s worries.

Is anyone paying attention? It’s only the survival of civilization as we know it. No biggie. Have we grown so cynical and fearful that we can’t even face reality barreling down on us like a freight train? We are looking at a nightmare scenario.

Costs can be externalized and deferred. But costs can’t be denied.
Even if we are lucky enough to die before costs become due, do we really want to be such sociopathic assholes in the legacy we leave for the coming generations, for our children and grandchildren? They will curse us for what we did and failed to do.

We will be among the most hated generations ever born. There will be no forgiveness for us. Memorials will be built in memory of the evil we committed and the destruction we caused.

Of course, we could in this moment begin to lessen some of this harm. We could prepare for the consequences we’ve unleashed. We could give these next generations a fighting chance. Will we?

Here is a decent article: Funny How? by Ben Hunt. It’s not the type of thing I normally read, but it’s worth a quick perusal.

My dad regularly reads this guy because of his investment views and he thought I’d like it. Like my dad, the author of this piece is strongly pro-capitalist with the standard advocacy of deregulation and such. That is what makes the following statements so powerful:

“I’m pretty sure that I agree with absolutely none of Thomas Piketty’s policy prescriptions. And the impact of his bugbear – tax policy – on wealth inequality is laughably minor compared to the impact of a triple in the S&P 500 market cap or central bank purchases of trillions of dollars of bonds. But if you don’t recognize that Piketty has a point when he says that today’s wealth inequality is both outrageous and poisonous, you’re just not paying attention. Increased wealth inequality always leads to increased political polarization, within and between countries, within and between political entities. That was true in the 1870s, that was true in the 1930s, and it’s true today.”

I’ve been telling my dad that for years. And he is finally coming around to appreciating why this matters. He used to dismiss it. Many people did. Even this guy might have not given inequality the time of day in the pre-recession early 2000s or further back in the booming 1990s.

So, many of those who are normally disconnected from the reality on these issues are coming around. Fear of consequences is finally hitting home. They are realizing that this isn’t just effecting poor minorities and third world countries. They are realizing that the entire status quo is being threatened… and that the time of externalizing costs has ended.

* * * *

For those who wonder about the consequences of high inequality, I came across two other relevant articles:

The new argument, which Piketty spelled out recently in the French newspaper Le Monde, is this: Inequality is a major driver of Middle Eastern terrorism, including the Islamic State attacks on Paris earlier this month — and Western nations have themselves largely to blame for that inequality.

Piketty writes that the Middle East’s political and social system has been made fragile by the high concentration of oil wealth into a few countries with relatively little population. If you look at the region between Egypt and Iran — which includes Syria — you find several oil monarchies controlling between 60 and 70 percent of wealth, while housing just a bit more than 10 percent of the 300 million people living in that area. (Piketty does not specify which countries he’s talking about, but judging from a study he co-authored last year on Middle East inequality, it appears he means Qatar, the United Arab Emirates, Kuwait, Saudia Arabia, Bahrain and Oman. By his numbers, they accounted for 16 percent of the region’s population in 2012 and almost 60 percent of its gross domestic product.)

This concentration of so much wealth in countries with so small a share of the population, he says, makes the region “the most unequal on the planet.”

Within those monarchies, he continues, a small slice of people controls most of the wealth, while a large — including women and refugees — are kept in a state of “semi-slavery.” Those economic conditions, he says, have become justifications for jihadists, along with the casualties of a series of wars in the region perpetuated by Western powers.

His list starts with the first Gulf War, which he says resulted in allied forces returning oil “to the emirs.” Though he does not spend much space connecting those ideas, the clear implication is that economic deprivation and the horrors of wars that benefited only a select few of the region’s residents have, mixed together, become what he calls a “powder keg” for terrorism across the region.

The economic hoarding by those at the top has been termed “income inequality”, but that’s neither a strong nor accurate enough phrasing. I have never heard poor people complain about “income inequality”; poor people complain about being screwed out of housing , or about working more hours for less pay or about having to choose between medicine and food. […]

Income inequality is better termed structural racism. White people earn more money with less education than black people and consistently have half the unemployment of black people. And, as new research has shown, “family wealth” predicts outcomes for 10 to 15 generations. Those with extreme wealth owe it to events going back “300 to 450” years ago, according to research published by the New Republic – an era when it wasn’t unusual for white Americans to benefit from an economy dependent upon widespread, unpaid black labor in the form of slavery.

Income inequality is better viewed as structural sexism. Women earn 78 cents on the dollar overall compared to white men, but black women only earn 64 cents and Latinas 56. Women are also routinely discriminated against economically for bearing children.

Income equality is better viewed as structural child abuse. In the United States, one in five children needs government help to eat. As Aisha Sultan recently wrotein the Education Writers Association, if a 30-child classroom looked like the nation at large, seven of the children would be living in poverty, six would be victims of abuse and one would be homeless. These kids aren’t just unequal; they are never offered the opportunity to achieve equality.

Income inequality is better viewed as economic genocide, which shortens the lives of the poor. As the New York Times bluntly put it last year, “where income is higher, life spans are longer”. For one of the most jarring examples of how this plays out, look no further than the Ferguson Report, which shows how just in St Louis County, the average life expectancy ranges from 91 in the whitest neighborhood to 56 in the poorest, blackest neighborhood.

I just finished reading Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country by William Greider. It’s not an awesome book, but it’s well above average. Greider is a liberal who seeks reform rather than to revolutionize the entire system. He is only radical in his optimism about democracy.

What I liked about the book is that the author wasn’t afraid to dig down into the foundation of our collective problems. One particular passage demonstrates this which can be found below. In that passage, he talks about the economy and the environment. His focus is on externalized costs, moral hazard and free riders.

If you’re an informed person, most of this won’t be new to you. But it is always nice when you find a clear-eyed accounting of the problems we face. I did learn one new thing from this passage. He discusses the work done by Herman E. Daly and John B. Cobb Jr as presented in their book, For The Common Good: Redirecting the Economy toward Community, the Environment, and a Sustainable Future. Basically, if all the costs are accounted for and measured, the US economy is a net loss. This isn’t just unsustainable but self-destructive.

There was a good review (by David E. Rockett) about Daly and Cobb’s book:

“Agrarian Localist that I am, with roots in the cultural and political Right — Daly was refreshing and often challenging from the ‘New and Improved Left. He brilliantly and repeatedly shows the ‘fallacy of misplaced concreteness’– that is the dubious use of logical abstractions which supposedly lead to good conclusions. NOT! In logic, it is similar to ‘the undistributed middle’– or in laymen’s terms — there is yet far too much we simply don’t know to conclude ‘this’. Those pegging him a traditional UN Internationalists look like blind Libertarians who are simply dead wrong, and didn’t read carefully. Daly is a modest Decentralists/Federalists’ in calling for a ‘return to the Local’. His call is for a federalism with far more attention to Local and Regional markets and development than we’ve had in this country since Lincoln. Yet Daly still uncomfortablly allows for some heiarchialism at national and international levels. Suprisingly, he uncritically buys all the status-quo environmental hysteria as ‘Fact’, indeed ‘wild facts’ he calls them. Thus, you have a mixd book — full of brilliant and insightful critique — and sullied by a good bit of carried-over authoritarian leftism.”

I just wanted to share that to show that this isn’t a right vs left issue. Even for someone like this who doesn’t appreciate the actual data about environmental damage can still understand the basic problems for human society.

This reviewer gets at an important point with his mention of the ‘fallacy of misplaced concreteness’. This is essentially Burkean conservatism being used to criticize laissez-faire capitalism as an ideology lost in abstractions and ungrounded in reality as it is. It’s interesting how closely aligned Burkean conservatism is to the precautionary principle that so many liberals obsess about.

Now for the passage from Greider’s Come Home, America.

* * * *

(Kindle Locations 2636-2707)

It is not people who have failed. It is the system that has failed people. The awkward secret about the American growth engine is that it thrives by wantonly wasting the noneconomic “assets” of people’s lives, the lost potential of their time on earth. These are “priceless” because they cannot be bought or sold. Their true value is unknowable, even to the individual. The growth engine wastes the future-the full range of possible experiences that ought to be commonly available in this very wealthy nation. When people look around, they see that vital elements of their surroundings have also disappeared or crumbled, and these things are not just the roads and bridges, but also essential public assets like the grace notes of community life and common verities trashed by the manic competition for growth and profit. Why must we live like this if we are so rich?

Ecologists look at the natural world and ask essentially the same question. The most dramatic and threatening price paid for economic growth, they argue, is the systematic destruction of nature. The finite capacity of the natural world to sustain life-human and otherwise-is endangered by the relentless encroachment of the industrial system. This threat means that there are indeed limits to growth, at least to growth as it is presently practiced. To put the point crudely, you can only pave over so much of the earth before nature begins to lose its life-supporting capabilities. Most mainstream economists dismissed this idea originally, but now they are more respectful, since global warming has provided frightening evidence of the collision between nature and the industrial system.

Images of the Arctic ice cap receding and polar bears stranded on floes have been seared onto our consciousness. Oceans and mountains, topsoil and rain forests, water, land, air, and the natural diversity of living things have all been laid waste. These are the things that sustain existence for all species, including ours. There are limits to growth and the world is bumping up against them, especially now that industrialization has spread to some very poor societies. Like wasted human lives, the losses to nature are not factored into the economic accounting, nor are they redeemable.

It may seem odd to accuse US business and finance of wastefulness since they are obsessed with efficiency. But the intense competition for returns among companies and investors focuses their managements on reducing their own companies’ costs, not the costs to society or nature. The gross domestic product is essentially the total of all of a country’s economic activities-the money transactions of producers and consumers and the performance and profits of enterprises and investors. Everything else is left out-human lives, society’s needs and values, the well-being of nature. In this system, even obviously negative events-a train wreck or an earthquake-are treated as positive since they will stimulate more economic activity.

Worse than that, the growth engine actively damages anything it does not itself value. Companies know how to enhance their own growth and profit by dumping their production costs onto innocent others, such as the workers stripped of their pensions and the rivers destroyed by pollution. Then the government must clean up the human injuries and environmental wreckage left behind. Some of the collateral damage businesses cause is no doubt accidental, but most of it is deliberate. In numerous ways, companies develop careful strategies for extracting profit from the assets of others. Someone does pay eventually for this antisocial wastefulness, but usually it is not the perpetrators who gained wealth from their irresponsibility.

This is more than an accounting problem. It is a deep disorder in the values that govern our country. The economy keeps output-production and consumption-expanding as measured in dollars. But the process of growth simultaneously creates a political illusion by concealing the net negative loss to society. Politicians do not have to face this contradiction since the government conveniently does not look at growth in these terms.

Herman E. Daly, a rare economist who endeavors to see the world whole, set out to unmask the illusion. He calculated the full consequences of growth by combining various indicators of social and ecological gains and losses with the standard economic measures of output and wealth creation. Daly and his collaborator, John B. Cobb Jr., called it the Index of Sustainable Economic Welfare, and its stunning results were a rebuke to narrow-minded economics.

In For the Common Good, Daly and Cobb explained that for many years, although US growth had been officially reported as positive, it was actually negative for the overall society when these other factors were included. Economists quarreled with Daly’s method of calculation, but other researchers have since confirmed his point by using different ways of weighing the losses and gains.5

[5. Among the controversial assumptions Daly made in constructing the Index of Sustainable Economic Welfare was that a measure of income inequality should be included. The premise was that society’s well-being degrades as inequality increases, a point that only hard-right conservatives would dispute today. The book was revised and the index refined in a second edition published in 1994.]

The great American economic icon-gross domestic product-is in trouble, especially as more Americans discover the truths that ecologists have been explaining for years. The familiar measure for defining progress no longer makes much sense, not for people or for society. Progress as it has been traditionally defined feels dizzying instead, like running in place, faster and faster, without getting anywhere, and even sliding backward without realizing it. Americans need to rethink the meaning of progress in broader, more realistic terms that are more consistent with the human condition. Demanding an honest accounting of reality represents a major step toward straightening out our future.

[ . . . . ]

In Steady-State Economics, Herman Daly invoked a similar analogy. To grow, he pointed out, is defined as “to spring up and develop to maturity.” People do not grow physically bigger and bigger throughout the life span (they would look like freaks if they did). At a certain point, they level off in physical size, but continue to develop the skills and qualities they need to sustain and enrich their lives. At a certain point, he suggested, wise and wealthy nations must do the same.7

The steady-state economy described by Daly and elaborated by others is radical and uncompromising. It rejects growth as we know it as a fixation on expansive accumulation that does not discriminate between good and ill consequences. This does not mean an end to “progress,” however. In terms people can recognize, the steady-state society continues to improve itself, developing and redeveloping internally, perfecting the social conditions that promote the public welfare and more fulfilling lives. The United States has the wherewithal to achieve this if it has the nerve to try.

Daly’s “steady state” is an economy in dynamic equilibrium that fulfills human needs without destroying the planet. It is an economy fully reconciled with nature’s limits and in harmony with the country’s abiding values of equality, freedom, democracy, and “life, liberty, and the pursuit of happiness.” Daly’s pioneering insights have gained a lot of ground among economic and social theorists in the intervening years, despite the hostility of orthodox doctrine. His perspective has been popularized as a foundation for sustainable development (though the meaning of sustainability is often corrupted in practice).

A concrete expression of Daly’s thinking is popularly known as the ecological footprint-a measure of how much humanity and industrialization have encroached upon and diminished nature’s capacity to replenish life. Even some leading corporations now promise to reduce their corporate “footprint.” The footprint of human activity-including the spoiling of natural resources like air, land, and water-is already overshooting nature’s carrying capacity by an estimated 25 percent, according to the Global Footprint Network. Biologists have called our era the Sixth Great Extinction, with thousands of species doomed by the shrinking habitats and failed ecosystems.

“Humanity is living off its ecological credit card,” said Mathis Wackernagel, the group’s executive director.”While this can be done for a short while, overshoot ultimately leads to liquidation of the planet’s ecological assets.”8

[8. Wackernagel said in announcing the release of the Living Planet Report 2006: “Humanity is living off its ecological credit card. While this can be done for a short while, overshoot ultimately leads to liquidation of the planet’s ecological assets, and the depletion of resources, such as the forests, oceans and agricultural land upon which our economy depends.” See Chris Hails, Jonathan Loh, and Steven Goldfinger, editors, The Living Planet Report 2006, WWF International, Institute of Zoology, and Global Footprint Network, October 24, 2006, http://www.footprintnetwork.org/newsletters/ gfn_blast_0610.html.]

These are social and ecological wounds whose existence can no longer be evaded. They are defining realities that Americans must face and accept if they are to think clearly and honestly about transforming how we live and are organized as a society-the dream I describe as America the Possible. Reconstructing a promising society from the wreckage of the past is possible, though every aspect is difficult and lies beyond the usual expectations of what seems possible in politics. Failure is also possible. I won’t dwell on the consequences of failure because it means genuine decline-we would become a country that was past its best days and resigned to a dispiriting future. That is not where we are, nor where we want to go.

A large number of diseases and deaths are caused by collective problems. Why should the individual have to pay the externalized costs of others? This is particularly problematic as the poor live in the most polluted areas while it is the rich living in the least polluted areas who benefit most from the externalization of costs.

I’ve never come across a conservative or libertarian who can offer a useful response to this kind of data:

“About 40 percent of deaths worldwide are caused by water, air and soil pollution, concludes a Cornell researcher. Such environmental degradation, coupled with the growth in world population, are major causes behind the rapid increase in human diseases, which the World Health Organization has recently reported. Both factors contribute to the malnourishment and disease susceptibility of 3.7 billion people, he says.”